Summary:

A new car sharing startup called Spride Share, backed by a who’s who of Silicon Valley, could be poised to overcome one of the largest obstacles to winning over consumers in a matter of weeks, or possibly days.

Spride Share: Using the Web for Distributed Car Sharing

Spride Share, a small company with big name backers, aims to take personal vehicles and turn them into a distributed car sharing network. Think of it this way: During all those hours when your car would normally sit around unused, you could instead rent it out to responsible neighbors, facilitated by online social networks and tools similar to what Zipcar uses to manage its car sharing fleet. CEO Sunil Paul, who founded early-stage investment firm Spring Ventures and was an early investor in solar startup Nanosolar, likened the idea to “cloud computing for cars” in an interview with us this week.

While the idea has many steps before it could become a reality, Spride is poised to overcome one of the largest obstacles to winning over consumers in a matter of weeks, or possibly days. The challenge here has to do with auto insurance regulations. As it the code stands now in California, insurance companies could void a vehicle owner’s insurance policy if the car was rented out to others (it could constitute a commercial use).

This month, however, a bill passed the California legislature that clears the way for programs like Spride Share. After undergoing revisions and working its way through the state Assembly and Senate for six months before winning unanimous votes in both houses last week, the bill could be signed into law within days or weeks by California Governor Schwarzenegger.

The bill, known as AB 1871, establishes rules for when a vehicle owner’s insurance policy stops applying, and when a commercial policy held by a service provider like Spride would kick in. In short, the bill lays out “where liability stops and starts,” said Paul. If and when the Governor signs the legislation (no later than September 30), said Paul, Spride will reveal details about its business plan (including important logistics like hourly rates) and a pilot program in the works with City CarShare, a non-profit car sharing provider in the San Francisco Bay Area.

This marks an important milestone for Spride, whose advisory board amounts to a who’s who of Internet and transportation innovators, including LinkedIn founder and chairman Reid Hoffman, Zynga CEO Mark Pincus, UC Berkeley Institute of Transportation Studies director Dan Kammen, and City CarShare CEO Rick Hutchinson.

Despite its Silicon Valley pedigree, Spride offers an example of a greentech venture that’s enabled by technology, as Paul put it, yet fundamentally is not a technology play. “This is not going to be the whiz bang app, or the whiz bang anything,” said Paul. Rather, Spride’s success will hinge on catching policies up with an opportunity and capitalizing on what Paul sees as a general trend toward cars in “reasonably dense settings” becoming a shared resource, “like cloud computing for cars.”

With cloud computing, users can share computing infrastructure over the Internet, accessing software, data and other resources on demand. With transportation and car sharing, the idea is to provide mobility as a service. At a basic level, rather than buying a car, you could buy access to a car whenever you need it. In a more complex “mobility on demand” system, as envisioned by MIT researchers and others, a comprehensive network of services would allow city residents to rent, for example, an electric car, scooter or bicycle when and where they need it in order to bridge the “last mile” gap between public transit stations and a final destination.

Car sharing in many ways presents higher stakes than the computing world. Unlike web services where the main security concern centers on protecting information, said Paul, a service like Spride Share involves people moving around in hunks of steel at high speed — as he puts it, “They can get physically hurt, and hurt other people.”

As a result, “proper and responsible” implementation of the distributed car sharing idea demands a sturdy legal foundation, said Paul. That foundation, as approved by California legislators, would limit the payments that an individual collects for personal vehicle sharing to less than “the annual expenses of owning and operating the vehicle.” Crucially for consumers, the bill also would prohibit car insurance companies from canceling coverage solely on the basis that a private passenger vehicle has been made available for a personal vehicle sharing program.

Part of the deal is that service providers like Spride Share will be responsible for a mountain of data. According to the text of the bill, personal car sharing program providers will be required to collect and maintain “verifiable electronic records identifying the date, time, initial and final locations of the vehicle, and miles driven when it is being used as part of the personal vehicle sharing program.” In addition, the bill calls for providers to make these records available to the vehicle owner as well as the primary insurer of that car.

As cars roll out with more and more computing power, Spride’s job may get easier. Like Zipcar, Spride plans to install some basic hardware on vehicles to allow entry with the swipe of a card to a reservation holder, as well as mileage tracking and other data collection. Eventually, Paul predicts, built-in hardware that facilitates personal vehicle sharing will become a “trivial feature” on most cars. To have it on every car within 10 years would be a stretch, he said, but to see it becoming an option in many vehicles within that time frame seems “reasonable.”

Now that AB 1871 has cleared the California legislature, and generated some preliminary interest among lawmakers in Oregon and Massachussets, said Paul, insurance companies have shown increased willingness to talk with Spride. But he emphasized that legislation is an uncertain process, and the final step (the governor’s signature) “cannot be taken for granted.”

In the meantime, Spride’s small team has been working to develop tools for vehicle owners, as well as the operations for working with City CarShare and insurance companies. The startup has also begun collecting information from people interested in renting their vehicles through the service, if and when it launches.

According to Paul, owners of economy vehicles as well as pick-up trucks and “surprisingly nice” cars like Audis and BMWs are among the early hand-raisers. Of course, “Lots of people want to have their clunkers on this,” he said. “But this is not going to be a clunker fleet.”

Asked where Spride expects to draw the line between clunkers and acceptable models, Paul replied that for now the company’s taking it case by case, making allowances for older models, for example, if they have been well maintained. The pilot program will probably be relatively inclusive (part of the initial goal is to simply gain experience), he said, while standards will “tighten up” for the actual launch.

Spride Share isn’t the first company to try tackling this challenge. RelayRides offers a similar “neighbor-to-neighbor car sharing” service in Cambridge, Mass., for example, and WhipCar has launched a relatively low-tech program (car owner and borrower have to meet in person) in London. Paul said he’s hopeful that Spride will be better at attracting vehicle owners and earning their confidence, partly by using the tools and networks that the company’s allies know so well. “I hope they all do well,” Paul said of Spride’s competitors, adding, “We expect we’ll be doing the best out of all of them.”

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